STS 5 | Starting Your Business

From Employee To Employer: Planning For That Exit Strategy Towards Starting Your Business With Jeffrey “JP” McAvoy

STS 5 | Starting Your Business

 

Many of us are dreaming of starting our own business. After years of working for a company, we begin thinking about making that shift in our lives to become business owners ourselves. However, the road towards that goal can be challenging and confusing. In this episode, Jen Du Plessis invites Jeffrey “JP” McAvoy, aka The Millionaire’s Lawyer, for a business conversation, where he shares the things we need to make sure to get done when planning that exit strategy from being employed to creating a business. With his background as the Founder and Managing Partner of Conduct Law, JP then breaks down some business laws and tax implications to think about and structure your plans around. He also gives a great view on understanding the difference between LLC, S Corp, and C Corp, protecting your business with intellectual property, bringing in people and other companies during your growth phase, and more. Don’t miss out on practical insights, advice, and strategies from JP and Jen’s conversation that will help you set your entrepreneurial journey for success.

Listen to the podcast here:

From Employee To Employer: Planning For That Exit Strategy Towards Starting Your Business With Jeffrey “JP” McAvoy

I am so excited to have you here. I want to say thank you for sharing part of your day with us and letting us come into your ears, your workout, or your drive home in traffic. We are grateful for every opportunity. I have a wonderful guest here and I had the wonderful privilege of being on his podcast as well. I would like to welcome JP McAvoy here. JP, welcome to our show.

Jen, thanks so much for having me on. Hello to all your readers.

Thank you. Let me give you a little background on JP before we get started because we’re going to talk about a topic that people don’t like to have a conversation about, but when something goes wrong, they have to have a conversation about it. That is business law, taxes, and creating a business. We’re going to talk about all those things. He is the Founder and Managing Partner of Conduct Law and practices corporate and commercial law. He’s also a business consultant with CPLS, P.A. He acts for clients buying, growing, and selling their businesses. He also represents a diverse range of corporations in Canada, the US, and Asia. He is the host of The Millionaire’s Lawyer, which is a five-star podcast where topics range from a business, legal, and accounting perspective. We’re going to talk specifically about the business portions of it. Welcome, JP. We’re happy to have you here. I love the diversity of what you do.

Jen, thanks so much. Thanks again for having me on. As a lawyer, I hear a lot of issues from clients, through my own consulting and through the podcast about people that are experiencing business issues, and we’re here to help. We’re here to help people structure things in a way that allows them to succeed in whatever they’re doing.

Let’s talk about some of that. What I want to talk about specifically now is startups. There are a lot of people in my age group, I’ll focus on my age group, where we were great employees, maybe a 1099 realtor or a W-2 person who worked for a company. Now, we’re heading out into this world. We’re making that shift in our lives or we’re planning that exit strategy for down the road about being a business owner.

There are many conflicting stories about whether you should be an LLC, an S corp, should you be a single member or multi-member and what kind of insurance do you need. There’s so much to do. Can you possibly break down some of this for us and say, “I’m going to move from the comfort of a job, no matter how I’m paid, into entrepreneurship?” What are maybe 3 or 5 things that we have to make sure we get done? Maybe there are ten of them that you’re going to tell us?

There are 100 but let’s break it down to a few. The key thing is to break it down to a couple of key steps right from the beginning as well. There is a mind shift that needs to occur as people go from employment or being a contractor for somebody to say, “I am the business owner. I’m going to operate this business now.” The first thing as a lawyer, when I say 100 things is we look to see how we’re going to carry on business. The method for carrying on business, if you will. People don’t realize when they switch from employer or contractor to business is, if they do nothing, they’re a sole proprietor.

They can operate in business without doing anything formally. They’re going to be attaching themselves personally to anything they do, and that’s not the best way of doing things. A lawyer is going to tell you right off the bat, “Let’s make sure we’ve structured ourselves in a way where it’s not attaching to yourself personally, and you’re setting up in a way that it’s clear and it’s a separate entity doing business.” That’s why we generally incorporate and we advise incorporating.

As you described, there’s a whole bunch of different types of corporations we can bring into existence. LLC is common and we’re lucky that we’re speaking about those now, S corp, C corp and some of these different structures. All of them are making it clear that it’s not the business owner and that’s an important characterization. That’s why as a lawyer, off the bat, we’re saying, “Let’s do that and separate it.” You talked about that shift they’re talking about in the future. The nice thing about anything other than a sole proprietor is they have a quality called perpetual existence. We make a joke about our 50s or age whatever the case is. A company will go on if it’s structured properly. A sole proprietorship will not. The business dies with the owner, so regardless of that, we say to people, “Let’s put a corporation into place.” It’s a bit tougher to say specifically which one. We need to look to specific attributes where we recommend which one we’re going to use, but certainly an incorporation, as our first instance, the first thing we do as a corporation.

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That’s super important. In your opinion, what would be the difference? I know the difference between LLC, S Corp, and C Corp, but others may not. In your opinion, what is the best form of doing that? There are reporting and filing requirements that are different. It costs more and there’s more to do so. If it’s only little old me, and I decide that I’m a great widget maker now, I’m going to have a widget making company. What is your opinion on the best course of action? Is it permanent or is it something where you grow into and switch up over time? Is it set in stone when you go in?

You’re asking a lawyer, so I’ll say that it all depends. The lawyer is going to qualify but generally, as you say, little old me the widget making company, we’re usually okay with an LLC, to begin with maybe even it’s a single member. If the idea is that’s the way it’s going to start and to keep it to a minimum, to begin with, you’re likely okay with that. It’s a great way of putting it, it can be changed. We can convert one to the other and it’s not that dramatic a process frankly to change from one to the other. You can’t get it wrong. The key thing as I say is to incorporate and then if we need to shift from one to the other, it’s available for us to do that.

With the tax laws that have changed over the last couple of years or so, and you know that I come from the mortgage industry. There are a lot of changes in there that have affected people’s buying. Some of it is a little silly. It only affects a low percentage of high earners but there have been some changes that affect people who are W-2 that are on straight commission as well. How are some of the changes affecting the tax implications and how is that changing the way that you are directing people regardless of where they might be in their corporate world now and their corporation?

The tax changes, we watch them regularly because what tax change is doing is they’re directing policy. They’re trying to direct people to do things in certain ways. They’ve looked at how people are doing work by contract and try to shift the way that people are doing things away from that. Even when we describe the LLC or some of the ways that we structure things, a lot of it is driven by the tax. If any individual is expecting to have money left at the end of the day. By that, I mean they’re not all hand-to-mouth. They’re not going to earn and spend. If they’re going to leave money separate, we’re starting to now direct people to be C corps and suggest that they live within the corporation.

It’s taxed more efficiently in the corporation than it is when it’s earned and spent right away. We’re starting to direct people to say, if you’re going to and can leave money within your corporation, let’s do that in a C corporation. Let’s say you’re going to minimize your tax. Any tax-deferred is going to be tax-minimized. We watch this particular government, not unlike others, it’s looking for a tax base and where it can generate tax earnings from and one of the ways that they know they can do it is when an individual taxpayer, whether it be a corporation or the individual is spending all the money. They know that they can tax it higher because they know it’s consumption. Whereas if you leave it in the corporation itself, it’s going to be taxed at a reduced rate.

That’s where we’re encouraging people. The thinking has shifted to say, “Maybe we ought to be discussing a C corporation earlier in a business’ existence.” Traditionally, people have been fearful and it’s a lot more than maybe a single-member LLC or an S corp because it’s all flowing through to the individual. I can tell you that it’s not that much, dramatically more, and certainly, if there’s a situation where the business owner is not going to be taking, not all hand-to-mouth, but now we’re saying to people, “Let’s consider the C corp for that reason.”

That’s a growth strategy. I’ve been self-employed for a long time, but full-time for a short period of time and it is income in and expenses out. There’s not much more going on there but I think this 2020 and the following years, it’s going to be residual and that’s when you want to make that shift. That’s key and important for those that are reading to remember is that when you have a little extra at the end of the month, that’s the trigger.

That’s the time. Frankly, a lot of the work to the firm comes from accountants. A lot of times, people have been operating a certain way and revenue expenses tend to equal each other early in a business’s existence. Accountants will start looking at it and say, “You’re starting to pay some tax here. What can we do differently?” It’s not that difficult to convert that LLC to a C corp at a later date. I’m saying that generally, it is certainly jurisdiction-specific, but generally speaking, it’s not that difficult to convert it. A lot of time and a lot of the work that I see is from somebody or an accountant saying, “It’s time to convert that to a C corporation.” At the end of the day, if there are funds that we can be left within the corporation, it’s wise to do so and you do that within a C corp.

I do have an accountant but I hope my bookkeeper sees that on a regular basis and suggests it to me so that I can take it to my accountant. Hopefully, that will happen. That’s one thing to do, get incorporated. We go back to this original question. What are some of the things as you’re starting up that you need to be considering like bank accounts? I can’t even remember everything that was in there, so maybe you can help us.

STS 5 | Starting Your Business
Starting Your Business: What people don’t realize when they switch from contractor to business is if they do nothing, they’re actually a sole proprietor.

 

Let me take you through some of the things that we see. It’s some of the things that we commonly get asked and that’s why we encourage people to incorporate right away because anybody doing business needs a bank account. If you start a business on your own and you incorporate, you’re backed to the entity doing business and it needs to set up a bank account. We’re saying to people, “Set up that company first so you’re not setting up a new bank account.” You’re also not setting up all of your accounts or all of your vendor accounts, frankly. If you have moved from a situation where you are a sole proprietor and established a company, you are required to set up an account under the name of the company. We always say to people do that right off the bat.

Make sure you have all your vendor accounts and everything under the corporation. Another thing is the agreements. It is a separate entity. For the entity itself, how and who is it doing business with? You want to make it clear that it’s not you acting personally. It’s a corporation doing and delivering the services. If that’s the case and the situation, make sure you’ve got agreements in place with anybody you’re doing business with and anybody that’s working for you as well if you’re starting to employ people.

That’s interesting because I’m thinking about my business. I have speaking contracts and they have my name and I’m the speaker who’s coming there but it’s all under my company name. It’s all signed by my company and I’m the one who signs it but it’s clear that it’s happening. Even with your vendors, tell me about how that would work. The first thing I think about is the vendor might be my bookkeeper. That agreement is with my company, but what about some of the other vendors that you’re working with that provide promotional items or occasional services for you? What is on there because there’s a lot of online buying these days?

You hit it on the head. Consider who the contract is with. If it’s a short-term or something that you touch regularly, you’ll probably say, “Do the next invoice to my company or let’s do the next rendering to the corporation.” It’s more the longer-term ones that you’re concerned with because you’ve got a long-term contract and you want to make sure that paperwork is straight. Things like leases are another example. If somebody that lease, there could be a personal liability attracted to a lease. You want to make sure your leases in your corporation if it’s a longer-term it may be a five-plus year lease. You’re saying that I want to have my lease, my agreement in place and it’s with the company.

For anything that’s longer-term, a bigger type of commitment, you want to make sure that it’s been addressed to the company. Overall, if it’s a good agreement to you, perhaps adding value to the company. When we talk to a vendor, maybe even a supplier or a client, somebody has got a long-term commitment to you or your company, you want to make sure they’re tied up. If you’ve done that, you’re in a spot where you’re adding value to your business. You’ve got a big contract to produce widgets as we described before. Somebody signs on saying, “I want 1,000 widgets per year for the next five years,” if you sign that contract to your company, it’s going to add value to your company. Anybody looking to purchase your company is going to say, “This is a great long-term commitment with somebody to sell. We know that we’ve got an ongoing obligation to so that’s good for revenues. We’re prepared to pay more for your company.”

I love it rather than having an invoice that says, “Give me 1,000 widgets this year and next year we’re going to renegotiate.” We move from invoice to contracts in the longer term. What else?

The next top spot is to turn to an IP. As a business lawyer, as the millionaire’s lawyer, we’re helping people grow their business to millions, I don’t start with IP. An IP lawyer would be different. An IP lawyer will be saying right off the bat, “Let’s get things protected.” I know that in my experience and from working with countless entrepreneurs, they don’t have the money upfront to be investing on the IP side of things necessary in the beginning now. As a business lawyer, I’m making sure they understand these are requirements to invest and I’m saying, “Let’s make sure you’ve kept yourself protected. During this point of time, you need to get you up to a spot where you can start investing.” By that, we’re going to talk about our technology as anyone. We’re being careful not to disclose too much. We’re making sure that anything we do disclose is done by way of confidentiality or an NDA, non-disclosure agreement so you are still protecting things. When you have enough of a following or enough of a reason to spend the money to get it protected, you’ve got the ability to do so.

That’s interesting because I’m such a giver. I’ve given so much stuff away. For those that are reading, IP is Intellectual Property. I’d want to make sure that everybody understands that too. If you create a form or you’re saying, it’s those things. How can IP differ from trademark and registered trademarks? How does that differ or does it?

I love how you take my maybe ‘too lawyerly answers’ sometimes and explain it in ways that add to it. I throw out a term like IP as well as Intellectual Property and that could include trademark as well. Traditionally, it refers to patent and copyright. It can and refer to the trademark as well. With each of those, going back to where you said before, as business lawyers and the IP lawyers don’t normally say this. A good one will but as a business lawyer, we quite frequently say that clients and people have protection by virtue of first use. It’s not as great as registered protection but people understand that if they develop something and they are the first person using it, they have some protection for it.

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The reason you go through a formal registration process is you want to solidify your claim to it and make it known to others that you’re using it. If anybody does infringe, you’ve got the ability to come back on them. To answer your question about trademarks specifically, that’s a good way to say that it’s IP, separate from perhaps patent, where we’re trading under a certain name, we want to make it clear that the name that we’re trading under is protected and owned by us. If anybody chooses to use it, you’ve got the ability to go back and tell them to stop using it or you’ll take action.

That’s not the name of a company, a trade name. Initially when you say trade name that’s the name of a company like Walmart, Kmart, Starbucks, or whatever but it’s also a program or a product that you put together inside of that. There are multiple layers of opportunities for you to trademark. It is not only that high part.

I appreciate you drilling down again like that. When we say trade or how we’re trading in the marketplace, it is what we’re going to find and a lot of people know these big trademarks such as Walmart or Apple, but it’s a lot more than that. It can be services that you’re providing, sometimes they’re even called service marks when you’re doing that. It can be methods that you’re employing as well. It’s different ways that you’re doing business and the way that you’re recognizing the marketplace for doing that. It doesn’t even have to be a word. We’re familiar with a lot of trademarks. Think of McDonald’s with the M or Nike, the swoosh. Those are marks under which they’re trading, so you go to protect those.

Also, the “Just Do It.”

They’ve trademarked those words in the way that they look, so the words themselves and in the way that we’re accustomed to seeing them. Those are separate trademarks and things that they’ve trademarked in a number of ways to create these layers to give them the protection they afford. They’re spending a lot of advertising, so they want to make sure that they protect it in a way that if anybody infringes, they can go back and stop them from using it.

JP, in the real world of us widget makers, how important is it for us to consider these trademark trademarks and service marks in our businesses in this world with internet and people can see that we’re doing live and what we could be saying? For example, I noticed that trademarks on there but a lot of people are talking about the Roaring Twenties right now because we’re in the twenties. I said, “No, it’s the Soaring Twenties.” This is a decade to soar. I could be out there saying, “That’s me. I said it,” because I said it on some live video, someone takes it and runs with it. Is it that important or to what depths do we have to be concerned? I wake up in the middle of the night worried that someone’s going to take “Soaring Twenties.”

Your sleeping habits aside, let me say you’re talking to a lawyer, so a lawyer is going to tell you that is vitally important to protect. This is why it’s so important to know which lawyer you’re working with because a lawyer that has a business as well is going to think a little bit like you by saying, “Is it worth it?” The lawyer says yes because if you haven’t protected it, you certainly don’t have any chance. You’ve got to also balance that against, “What if somebody does steal this? What am I going to do?” It’s only protecting, on the one hand, you’ve got to be willing to action it. If you’ve got protection, you’ve got to be willing to take action as well.

For some clients, they are saying, “Someone’s using Soaring Twenties and I’m never going to do anything about it.” As a lawyer saying, “Perhaps we don’t spend the money protecting it then.” If you’re going to be protected, but you’re not going to enforce protection and you’re not interested in spending the money to do that, perhaps you don’t go for to and you forego the risk. You say, “I’m not going to allow it to keep me up at night because I know someone may take it.”

On the other hand, if someone’s spending a lot on a brand and that’s the whole essence of the company, going back to the value we talked about before. We were at the spot where we were talking about IP in terms of that value. If it’s brand of jeans or a type of drink and the only difference is the actual label on it, then you’re saying to the client, “If that is what your value is and if that’s what you’re attributing, you’re spending money marketing that name, you’ve got to protect it and if somebody infringes, you’ve got to action it.” This ultimately comes down to business decisions but where it makes the most sense to spend money.

STS 5 | Starting Your Business
Starting Your Business: People understand that if they develop something and they are the first person using it, they actually have some protection for it.

 

I love that example of jeans because I can understand that. It’s like Kleenex versus Puffs or whatever. That’s good with the end in mind because it’s like, “I don’t like that they used it, but it’s not a big deal,” then that’s the answer to that question. We’re going to incorporate it. That’s going to be one thing that we’re going to do. We’re going to IP ourselves and there was a third one. As we’re setting up, what are some of the things that we need to be thinking about?

The other one was agreements. The next one is to start discussing what the growth prospects look like and how that’s going to be accounted for. By growth, it’s two things. It’s within the ownership of the corporation itself. A lot of times we need money. When you do talk about financing things, are we going to borrow it or are we going to use the equity of the corporation to get us to that next level? If we need equity for the corporation, we have to have a structure to allow for that. The second side of things as well for that growth is, who we’re going to get to help us? Employees, contractors, independent contractors, or are we’re going to bring people in to do work for us? In both cases, are we going to use equity to help pay or we’re going to borrow we’re going to funds from the company allow us to pay? That’s the next level. It’s starting to talk about leveraging things and there are a few strategies you can use to leverage these problems.

Does that also include joint ventures, affiliates, and things like that as well?

Yes. These would be all the leveraging ways. If you’re talking about bringing somebody within the company, internally another shareholder. You’ve got to talk about employing somebody or having an independent contractor to come in or are you going to do that with another organization. It’s a joint venture with another organization. All these ways are scaling. It takes us with the growth phase of things and how we are going to do with others. For the most part, we can be more when we’re with others. How do we want to bind together with others to bring whatever we’re doing to market?

That’s important too. I learned that lesson and I’m still learning that lesson because when I first started, it’s all me and it still is. I’ve got a few outsourcing people but it’s pretty much me. As time goes on, I’m thinking, “Did I go down the wrong road?” Sometimes you go down that road far only to find out it’s not the road, but that’s a good lesson because now you emphatically know that that’s not the road. I’ve always been the kind of person that for example, let’s say bookkeeping. That’s the one thing I don’t do. I could do my bookkeeping to learn the value of bookkeeping so that when I want to engage with someone for bookkeeping, I’ll have a better understanding as now a new entrepreneur over a salaried or contracted employee as to how much that’s worth for me. I think that there’s value in that. Do you agree?

I’d agree to a point because there is a certain value in the learning side of things. However, I know you are a brilliant person. You’re good at what you do. I would suggest, aside from learning, your time is probably not best-spent bookkeeping. Your skillset would be different from that and I would challenge you to think similarly in other areas. For example, your online marketing, your legal and other people, and other team members that you work with think about where is your best place. You need to be in front of a microphone. You need to be on stage, you need to be in front of people because that’s your surreal skillset. Anybody you can work with that can allow you to be doing more of that I would suggest would be good people for you to talk to.

That’s a good point, so it’s about your highest and best use. It’s the Hedgehog theory, “Do what you do best, what you love to do, and what makes financial sense for your practice.” If you don’t love doing something, you’re not that good at it, it probably doesn’t make financial sense for you to be doing it, so find someone else to do it. That’s what I had said. I went down that path and I’m still learning it because I’m still making those decisions now. This is a critical point for me and in my practice to be saying, “I’ve done enough of those activities and it is time to move on.” Do you have any other suggestions to round that out?

Conveniently, you said from the beginning how many and now we’re up to five. We’ve taken it from startup to the spot where we’re growing, which is wonderful. The fifth is I always say to people to think about your exit. You hinted at it that before. Think about your exit. What is the end goal? If you don’t know what it is, there’s no chance you’re going to get there. You’re going to end up somewhere else. That fifth and the key one is to say, as we’re starting up a business, think about what an exit might look like and what things could be. There might be a whole range of things but because we’ve got that perpetual existence now, we know that the company will go on. We don’t know what’s going to happen when we exit it. I say to people to think about what that looks like for them as well. It’s important to make sure they’ve done that.

Often, through those first several stages, to the first four stages, it’s all here, now, present, trying to make ends meet, make things happen, and try to be successful. We run across so many people in our lives that could be instrumental in that exit and when we get to the exit, we go, “Who’s that one guy that I was talking to ten years ago?” If we think about that now, we can hold these people closer to us so that we have this great team that is ready for that exit. “I’ve been trying to exit for years,” I’ve heard people say it.

90% of those businesses that fail have not gotten proper advice. Click To Tweet

I hear that all the time. It’s a couple of things because you can make your business more valuable by making sure that a few things are in place and also you can minimize your tax. That’s what happens is for ten years all of a sudden, something happens where maybe it’s something unsolicited or somebody gets sick and all of a sudden, they have to do something. Whereas if they’ve got it planned at an earlier stage, there will be much more successful in the end.

I’m glad that you mentioned that to me. Thank you for sharing those. I’m going to stop at five because there are 100. I want to ask you, what is the biggest mistake people make in businesses? We know that the statistics for small business are horrible. We know when five will fail, and you think you’ve got it and in the fifth year, there’s a whole bunch more who fail. What’s the biggest mistake that you see people making in their businesses that they can’t get to that million-dollar mark that you’re teaching and sharing?

They say it’s 8 out of 10 fails. What we hear as often is that 90% of those that fail haven’t gotten proper advice. It’s quite convenient for a lawyer to say this, but do the stats truly indicate that people do not get advice? It’s interesting and the benefit of shows like this, where they’re getting some advice now and they’re realizing, first of all, the things that we’re talking about are doable. You don’t need to be afraid of them. That’s one of the reasons why people don’t get that initial advice is because they’re afraid. They also think that it’s too expensive. They think that they don’t have the money to do it and I say to them, “First of all, it’s not that expensive, so it’s not that scary. Also, if you’re risking failure, is it not more expensive to failed and get some of that advice?” Some of these simple things we’re talking about can be put into place rather cost-effectively and give you that much greater chance for success. Certainly, the biggest thing I say to people is to get advice. The ones that don’t get advice are the ones that usually suffer and pay the price.

I don’t want to ask you what makes you so different because I know what’s making you different. It’s simple. You lay it out nicely for everybody. It’s one thing to be a lawyer or an attorney when you’re younger, but what got you into the space that you’re in of doing podcasting? That’s pretty interesting for an attorney. Most attorneys are very attorney. I’ll stereotype. What happened to you?

For me, I see what the future is to a certain degree and lawyers are dinosaurs in themselves. They’re slow-moving. It’s interesting that even business lawyers, a lot of them aren’t business people. I was an early partner in a big firm when I was younger because I got the business side and that’s what made me a partner. By the same token, I realized that my colleagues and my fellow partners weren’t business people whereas I am. I could see how businesses and what the future holds, so I realized it’s important to be in this medium and this space.

I would say the same thing about people when they’re getting advice from their attorney or their lawyer. If they haven’t run a business himself, how good is the business advice they’re getting if they don’t understand some of the issues? As an IP lawyer, they want to see a big retainer to protect IP property when they don’t appreciate the fact the owner of the IP property doesn’t have the resources to find it. As a business lawyer, I’ve seen a lot of these types of things, and I’m a business person myself so I understand where business needs to be. I advise my clients sensitive to what the business realities for them might be as well.

It’s a holistic approach is what you’re saying rather than looking linear, getting in, doing the lawyer thing, getting out and waiting for the next client to give you a call. I love that. We all know that everything’s moving 1,000 miles an hour on the internet. It’s a self-preservation process, that’s for sure. I want to ask you another question. Thinking back on all your business and the time you’ve been in business, what has been your biggest breakthrough for you that you could share with people on this show that say, “Expect these types of breakthroughs to happen?”

For me, the biggest breakthroughs have been coming through working with the clients who have taught me a lot. The biggest breakthrough for me is having done all the work on the academic side of things to become an attorney. That means a lot of schools. I did a four-year undergrad and did three years of law, so it’s seven years and it’s eight years of formal education. Then you’re licensed, but you don’t know anything. You know how to interpret statutes and you certainly can read well, but you don’t get how business works. The breakthrough for me came just out of law school. I started working with some entrepreneurs that are household names now. Some of my friends from school are some of the richest people in the world.

They went and started at some of these companies. I started feeling good about myself. I got out of law school and they’re like, “You can’t do that.” It turns out you can. They’ve started companies like Tesla and PayPal. Look at these where they’ve shifted the way business is done. Lawyers all the way through the process, even as we were building those companies were getting in the way and telling us why we couldn’t because that’s legal training. Legal training tells you why you can’t and I realized that entrepreneurs tell you how you can. I would like to fill the void or be all talk between the two sides to bring a project to fruition.

STS 5 | Starting Your Business
Starting Your Business: The reason you go through a formal registration process is you want to solidify your claim to something and make it known to others that you’re using.

 

I can see how you can be valuable to anybody who’s starting their business because as an entrepreneur, you take more risk. That’s where you look for opportunities and ways but there’s still an underlying ‘can’t’ in what you used to do. The example is in mortgage lending, it’s high in compliance. When someone says, “I can flip a house by using some secondary money, some private money from here.” I go, “Hold on. No, you can’t.” I know you can but the example is we think that you can’t. Even if you come out of that environment, you are an entrepreneur and you’re thinking that the sky’s the limit and you’re going to do all these wonderful things, you do have the ball and chain that’s dragging you around saying, “Something’s not there. I don’t quite get it.” I can see how powerful you can be in opening up those doors and cutting those chains and saying that there are possibilities out there for you.

You’re hitting it on the head. The lending aspect of things is compliance-focused and you get a lot of people saying, “You can’t do this,” because they’re trying to check off all the boxes and trying to do it according to what as the lawyer would say, by statute, it says. Whereas the business owner, the entrepreneur is thinking or trying to think outside of the box of the best way of doing things in a way that might turn a profit. It’s the gap in between where there are not a lot of people that can operate. I know that you can, in some of our conversations. You’ve done that through your own business as well. I certainly can as well. You need to find people like that. Those are the skilled and in-demand people to help the business person take it to the next level. That’s an important skill set to have.

We have to recognize that as entrepreneurs, we’re bringing that baggage. Here’s where we need advice. We need advisors to say, “Help me with my blind spots. Help me with my thought process here because I know it might be short-sighted and I want to make sure that I’m not missing an opportunity.” That’s wonderful what you do in that aspect as well. What else do you want to talk about? One of the things that I want to talk about in the growth part of businesses is how do we get our businesses to $1 million? What are some of the aspects we need to have? I can tell you that I know one of the things you’re going to say is, “Don’t do it alone. You can’t make $1 million on your own. You’re going to have to hire people.” What other things will get people to that million-dollar mark in revenue for their company?

The big thing is you can’t do it alone and it would amplify that or add to it by saying, “Not only can you not do it alone, but it’s also better off without you.” Let me be specific on that. It’s hard for business owners to hear this especially if somebody would say, “This is my baby. This is how I started.” Businesses become more valuable if they’re not reliant on the business owner. If you can imagine, it almost seems counterintuitive, but that’s the reality of things. There’s a real skill set to starting companies. I’ve worked with a lot of startup entrepreneurs. If they want to get to the next level, sometimes they have to back themselves out of it. It’s usually somebody with a different skill set that can take it to the next level. One of the first things they do is they’ll exit the founder.

The founder can still be involved in some way but a lot of these companies I was talking about before that I’ve helped start. The founders will take a backseat and if they’re smart, they’ll do it willingly. That’s the way you get the real torque because that allows other people to come in maybe with some dollars or maybe with a different skill set to take to the next level. The business owner becomes a millionaire when they sell their business. That’s the key thing. I described this and I don’t say it all through the podcast or in the marketing materials. The key to all this is stretching yourself for a sale because it’s on the sale that you become a millionaire.

It would be crazy to be to leave a long-term job, a 401(k), benefits and all that stuff to go into entrepreneurship because you don’t have all the benefits. That’s probably one of those 100 things. It’s a safe harbor, insurance, and all that. You lose some of those benefits. You work hard and you decide one day that you’re not a business anymore and it’s gone. All those clients and opportunities are almost like, “How dare you build this big business, build the confidence of your clients and send them out into the wind and say, ‘Go find another person like me?’” You and I were talking before we went live about Frank Shankwitz from Make-A-Wish Foundation. One of the things that he did is eighteen months after he founded Make-A-Wish, he stepped back and let other people run it. He was still the CEO and all those things, but he stepped back and he let people run it, and look at what it is now. Brian Smith, the Founder of UGG did the same thing. It was funny because he goes around and speaks. He and I are on the same stages and things. He speaks about UGG and everything’s UGG. Everything about him is his UGG, yet he only had that company for a few years that he was involved in it. Now, he’s a spokesperson for it.

We’ve identified it. That’s the real key thing to the millionaire’s lawyer saying, “You’re not going to be there indefinitely.” My most successful clients have started a company and after a few years, sold it. I started another one and after a few years, sold it and started another one. They’ve created all these organizations that still exist in perpetual existence because that’s their skill is to create them and to sell them. They become wealthy in the process. It’s done properly, they survive and they keep doing good for people that are being serviced by them. It’s important to make sure that they understand that.

Do you know who else? Jeff Hoffman, and I know I mentioned him before we came on. Priceline, the kiosks at the airports that we like, those are his. He moved on from Priceline and said, “We need a kiosk in the airport,” and now that’s his venture. He’s gone beyond that now. He has a new venture. That’s an incredible way to grow business. It’s not growing the business. It’s growing your wealth through the process of it. What’s it like to be you every day?

I’m great and happy. I think to myself that you get to create it in your vision. You get to create what you want. For people reading, take those words to heart because I wake up thinking, what am I going to create here? How am I going to move it forward now? I’ll be working with one or two clients likely every day. I try to inject that into their business and make sure they understand that they can create and take it where they want to go. I also do the same thing, which is why I get into the podcast, why I do all the other properties that I work on as well is because I’m creating a bunch of things simultaneously. I’m always excited to see where the fruits of my efforts are going to take things for that particular day.

It's on the sale that you actually become a millionaire. Click To Tweet

For fun, you golf?

I do.

It’s funny because I don’t know many attorneys that golf. I know doctors do. Attorneys are always at their desks. They’re always working these late hours. The attorneys I know at least, they’re always doing that. I love that you’re doing that and you like to travel a lot too. Where do you like to travel aside from speaking because I know you’re running around speaking as well?

I do some speaking. I love Europe if I can get to Europe. I was in Portugal in Spain. You realize as this world gets smaller and of course, throughout North America, but a lot of that is for business. If I getaway to Europe, I like that aspect of things because I love language and I love food. I love how you can be consumed in these other places. I don’t know about you, but every time you travel, you seem to take something else back from that place. You eat something or you’ve had something and it influences you. You get a chance to enjoy it again when you get back home.

Do you speak any other languages?

I speak French.

You’re from Canada. I was curious when you said you were in Spain because we were in Barcelona and I love Barcelona. Mostly because it’s architecture and it’s my degree. For me, it was all about architecture, but I love that you’re traveling and doing it. Let me ask you this question. What’s happening in your practice now and how can the readers help you?

In my legal practice, it’s a business law firm. I have a business legal practice. I’m helping a whole group of clients in the evolution of their businesses, and that’s from the time when they’re starting them up. I service a lot of those corporations. We did get too technical of what are the 100 things. I maintain those corporations and in the course of maintaining those corporations, I always speak to that what we identified as number five is, what does your exit look like? Ongoing for me is discussing with a client what that might look like and depending on where they’re at in their growth trajectory if you call it that.

There’s likely an opportunity to reorganize things or have them structured for that. I spend a lot of time doing that in my practice, and a couple of those clients are at the sale phase as well. In the sale phase, for the most part, the negotiation of the sales occurred. I’m consummating the transaction for a number of clients. That’s ongoing and traditional law is my day job as an attorney. I’ve got a busy podcast, a book and we’re working on an online course that’s going to summarize a lot of things we talked about here. When we have that up, I’ll be sure to let you know.

STS 5 | Starting Your Business
Starting Your Business: The ones that don’t get advice are the ones that usually suffer and pay the price.

 

How can we help you?

Thanks for having me on. These types of conversations and every chance we get to connect, Jen, I appreciate that. You were gracious and a wonderful guest in our podcast. It did well and is doing well. For those reading, I know that it’s no surprise to you that Jen is able to bring a lot of value to anybody that’s reading. For me and my audience, let’s figure out ways of combining them so we can bring the word and make sure that we have all the things that you and I know to be things that others can learn from as well to help them grow into them in their businesses.

If you’re reading, this is about, “Stop talking, take action and get results.” Execution laziness, you know what needs to be done, so let’s get it done so you can protect yourself, your business, and your future. It’s all the pieces of that. If someone wants to get ahold of you, what’s the best way for them to reach you, JP?

Probably the best spot is my web page, JPMcAvoy.com. You can get the book there. You can hear The Millionaire’s Lawyer Podcast there as well. We’ll have the online course up there when we get that organized ready to go. If people are looking for traditional lawyers, they can find me at Conduct Law. Email by me is JPMcAvoy@ConductLaw.com.

I’m reminding everybody that we’re also doing this on via video, so it will also be up on YouTube. As we leave here, is there a quote that you would like to share with everyone that’s inspired you, or is there a book that you would like to share that you are reading now or have read that has changed your life?

Benjamin Franklin, I remember reading his autobiography and being struck by the amount of practical advice that he was giving in his day that applies to the present day. He’s got a lot of famous quotes that have come from the book as well. One of them being, “Learn to plan or plan to fail.” It’s something along the lines of that. It’s the type of thing that we’ve heard in different phraseology throughout the years. The Autobiography of Benjamin Franklin is a stunning read and it’s something that would be applicable to any business person now. I suggest to anybody else that is interested, feel free to pick up a copy of that as well.

That reminds me of Les Brown. He says, “If you’re casual about your business, your business will become a casualty.”

That’s great.

It’s about the same thing and you can say that, if you’re casual with your relationship with your spouse, it is going to become a casualty. You can apply it to pretty much anything. It’s been wonderful. Thank you so much. I learned so much, I always do. This is why I do this show because I like to learn from people. I want to say thank you so much for your sharing your expertise with us. It’s priceless on a podcast like this. You can’t get this normally. Those who are reading, please take JP up on his offer to help you out, connect with him, and look at for his course. JP, I want to say thank you for gracing us with your presence. It’s been an absolute pleasure.

Jen, thanks for having me on. Thank you for sharing with your readers. I look forward to the next time we get a chance to collaborate.

I can’t wait. We’ll catch you next time. Please give us a great five-star rating and be sure to review us so that we can continue to grow forward. If ever you have anyone that you know that had a breakthrough in their business or is in the mortgage or real estate space, please let us know. We’d love to have an opportunity to have them share their story as well. We will catch you next time.

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About JP McAvoy

STS 5 | Starting Your Business

JP McAvoy is the founder and Managing Partner of Conduct Law and practices corporate and commercial law; and is also a business consultant with CPLS, P.A. He acts for clients buying, growing, and selling their businesses. J.P. represents a diverse range of corporations in Canada, the United States, and Asia.

In addition, JP is the host of a The Millionaire’s Lawyer, a 5 star rated podcast on a range of topics from business, legal, and accounting perspectives.

In his spare time, JP can be found on the golf course or spending time with his wife, daughter, and son at the cottage. JP travels frequently, and might be in your area next!

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